Andhra Bank Car Loan Review

With the corporate slogan, “For all your needs”, Andhra Bank professes to meet all the requirements of prospective car owners through its range of vehicle finance scheme. The bank offers loans to individuals for not only new and pre-owned cars but for car accessories as well. Andhra Bank in fact, has a car loan plan especially tailored for women. Titled Vanitha Vahan, this scheme allows women to take loans for purchase of new as well as used cars. Small or Medium Enterprises (SMEs) and corporate entities can also avail of the finance scheme under certain conditions specified by the bank.

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Quantum of finance

Under the regular vehicle finance scheme by Andhra Bank, salaried employees as well as SMEs/corporate borrowers under Standard Asset Category and with credit rating B can avail up to 85% of the “on road” price of the car. The “on-road” cost includes invoice price, Life tax, Registration charges, Insurance and accessories.

Under the Vanitha Vahan scheme women borrowers can avail of a maximum of 90% of the “on-road” price of the vehicle or up to three times their annual gross income, whichever is lower.

Other borrowers can get a maximum loan of 80% of the “on-road” cost of the car or three times their gross annual income, whichever is lower.

One can also take a loan for car accessories from Andhra Bank in which case the amount will not exceed Rs 5000.

Margin required

In case of salaried employees where salary deduction is available, the required margin is 15% of the on-road price of the vehicle. The same margin will also have to be met by SMEs/corporate borrowers under Standard Asset Category and with credit rating B.

The margin under Vanitha Vahan scheme is 10% of the “on-road” cost of the vehicle.

Borrowers who fall outside the above two categories are required to meet 20% of the “on-road” price of the vehicle from their own resources.

Eligibility conditions

The prime requirement for availing a car loan from Andhra Bank by an individual is a minimum gross income of Rs 1 lac per annum.

Women who wish to borrow under the Vanitha Vahan scheme must meet the following conditions:

*    In case they are salaried, they must be permanently employed. Professional and self-employed women must have income proof.
*    Women borrower should have a valid driving licence in their name.
*     Salary of the applicant is to be routed through Andhra Bank.
*     Letter of Undertaking from the employee for recovery.
*    Post dated Cheques to be obtained from applicant at the discretion of the manager as a special case.
*    In case of P&SE Woman, Post dated cheques are required to be produced by the applicant.
*    The applicant must have a minimum gross income of Rs 1 lac per annum. 50% of the husband's salary may be taken for computing eligibility provided he agrees to become a  co-obligant.

Documentation for loan processing

Applicants for car finance from Andhra Bank, either under the regular or Vanitha Vahan scheme, are required to produce:
*    Valid driving license
*    Proof of Income  which may be a Salary Slip/ IT Returns/ Assessment Order, Proforma Invoice.
*    In case of second-hand vehicle, the valuation certificate from a reputed garage.

Loan tenure

In case of new car loans, the repayment period is a minimum of one year over which the borrower must pay 12 Equated Monthly Installments. The maximum repayment period is 6 years in which case the borrower will have to pay 72 Equated Monthly Installments.

This repayment schedule holds good for both the regular as well as the Vanitha Vahan car finance scheme from Andhra Bank.

Rate of Interest

The Andhra Bank vehicle finance webpage does not give any information on the rate of interest charged for car loans.

Processing and pre-payment fees

Women Applicants for car finance under the Vanitha Vahan scheme are excused from paying any processing or upfront fees. In case they wish to foreclose the loan, a 1% prepayment fee will be charged by the bank on the balance outstanding at the time of prepayment. In fact if there is a record of prompt repayment, women borrowers under the Vanitha Vahan scheme may be entitled to a discount of 0.50%

There is no information of processing and prepayment charges under the regular car finance schemes on the Andhra Bank website.

Security

After disbursal of the car loan, Andhra Bank requires the hypothecation of the vehicle purchased in case of both the regular and Vanitha Vahan vehicle finance schemes. In the former scheme, co-obligation of a third party will be acceptable to the bank while in case of the latter, guarantee by the Husband or father of the applicant or any third party will do.

Loans for pre-owned cars

Andhra Bank extends loans for purchase of second hand cars as well, in which case however the vehicle must not be more than three years old. The maximum amount of loan granted for buying used cars is 60% of garage value or Rs. 5,00,000 /- whichever is lower. The margin for loans to purchase a used car is 40% of value as per reputed garage certified after depreciation. The loan repayment tenure in this case is a maximum of five years over which the borrower must pay 60 Equated Monthly Installments. Besides documents like driving licence and income proof, the prospective borrower must also produce a valuation certificate from a reputed garage while applying for a loan to purchase a pre-owned car.

The terms and conditions imposed by Andhra Bank governing the approval of loan for purchase of pre-owned car are applicable to both the regular car finance scheme as well as the Vanitha Vahan scheme.

Launching a car finance scheme exclusively for women borrowers is a laudable effort. With this Andhra Bank has made it easier for women professionals and working women to own a vehicle of their own and that too under relatively easier conditions. However the bank website needs to offer more information on matters like rate of interest on its car loans, processing and service charges as well as enable application through an online form.